News Corp. Seeks EU Antitrust Approval for BSkyB Deal

Nov. 3 (Bloomberg) -- News Corp. formally asked the
European Union to approve its proposed takeover of pay-TV
provider British Sky Broadcasting Plc, starting a regulatory
process that may end up in U.K. hands.

News Corp. made the request in a notification to EU
antitrust regulators at the European Commission in Brussels,
said Jonathan Todd, a spokesman for the agency. The commission
set a Dec. 8 deadline for reviewing how the deal might affect
competition in the 27-nation EU’s media market.

The notification is a sign that the EU watchdog “is
satisfied that it has sufficient information to start the formal
process,” said Jenine Hulsmann, a lawyer with Clifford Chance
LLP in London. “They will still continue to speak to any third
parties that have issues.”

The EU filing sets the clock ticking for U.K. regulators to
decide whether to raise objections to News Corp. Chief Executive
Officer Rupert Murdoch’s attempt to gain from the steady
subscription business of Britain’s biggest pay-TV operator.
BSkyB in June rejected an initial 7.8 billion-pound ($12.6
billion) bid for the 61 percent of the company that News Corp.
doesn’t already own, saying it was too low.

U.K. Business Secretary Vince Cable has authority to
intervene in transactions based on concerns about media
plurality and the dissemination of information to the public. If
Cable decides to step in, he will ask Ofcom, the U.K. media
regulator, to examine the case and make recommendations.

‘Political Liability’

“With all the rhetoric that we have seen, Cable is going
to request that it be referred to Ofcom,” said Will Smith, an
analyst at Jefferies International Ltd. “It will just be a
political liability if he doesn’t.”

Under government guidelines, Cable must aim to decide
within 10 working days.

“This is an important issue which the Secretary of State
will consider carefully,” Cable’s office said in an e-mailed
statement.

Britain’s Office of Fair Trading may also attempt to wrest
jurisdiction over the approval process from the EU agency within
15 working days of the notification.

OFT spokesman Frank Shepherd said the U.K. watchdog hasn’t
received notification. “It is too early to say whether we would
be seeking to have the case referred back,” Shepherd said today
in an e-mail.

Better Placed

The commission can cede jurisdiction to local regulators
over the whole or parts of a deal if it accepts arguments that
they are better placed to conduct probes.

U.K. newspapers and the British Broadcasting Corp. in
October sent a joint letter to Cable asking him to block News
Corp.’s bid, saying it harms the public interest and will have
“far-reaching consequences for media plurality.”

BSkyB fell 2.5 pence to 707.5 pence at 3:14 p.m. in London
trading. News Corp. climbed less than a cent to $14.60 in Nasdaq
Stock Market trading.

News Corp., the owner of The Wall Street Journal and the
Twentieth Century Fox film studio, owns Britain’s biggest
tabloid, the Sun, which backed the Conservative party of Prime
Minister David Cameron in Britain’s general election. It also
owns the Times and Sunday Times newspapers.

News Corp. Chief Operating Officer Chase Carey said in a
June conference call that the process may take at least six
months and wouldn’t require a competition review of its
newspapers and other media holdings in the U.K.

Premier League Soccer

Formed in 1990 with the merger of Murdoch’s Sky Television
and British Satellite Broadcasting, BSkyB has about 10 million
subscribers. Buying exclusive live broadcasting rights in 1992
to popular events such as the Premier League, England’s top
soccer league, helped it win clients. It added offerings such as
the History Channel and Disney Channel in 1995.

In June, the companies failed to agree on a price for the
deal and said they would focus on gaining regulatory approval
first.

Attorneys generally agreed News Corp.’s bid for full
control of BSkyB will eventually win approval because Murdoch
already owns 39 percent of the broadcaster and his influence on
the company is already in place.